Saturday 29 May 2010 19.05 EDT
First published on Saturday 29 May 2010 19.05 EDT

The following correction was printed in the Observer's For the record column, Sunday 6 June 2010

The story below about a campaign by British animators for government support described the industry as "creators of Thomas the Tank Engine", but Thomas got up steam long before animation, in the books of the Rev W Awdry.

Wallace and Gromit, Bob the Builder and Pingu are going in to battle as leading lights of Britain's animation industry prepare to campaign for government support for UK-based talent.

The industry, creator of classics such as Bagpuss, Mr Benn and Thomas the Tank Engine, is seeing talent lured overseas by lucrative tax breaks. And they complain that work is being outsourced to studios in the Far East. Earlier this month it emerged that a film produced to showcase one-eyed monsters Wenlock and Mandeville, the mascots for the London 2012 Olympics, was produced in China.

Animators including Blue Zoo Productions, Chapman Entertainment, Nickelodeon UK, Wallace & Gromit creator Aardman, and HIT entertainment, home to Bob The Builder and Thomas the Tank Engine, have banded together as Animation UK, to try to revive the sector's fortunes. They plan to lobby the Treasury, as well as culture secretary Jeremy Hunt and culture minister Ed Vaizey, calling for similar tax breaks to those already available to the film industry.

Their new campaign, Save UK Animation, launches in a couple of weeks' time but it is marshalling its forces ahead of the coalition government's emergency budget on 22 June. While in opposition, both parties talked of the need to support the creative industries, and Save UK Animation is compiling a dossier on the economic value of the industry to bolster its case. Bernard Cribbens, the voice of the Wombles in the early 70s, is patron, and Mark Field, Conservative MP for Cities of London and Westminster, is also actively involved.

"Animation UK campaigns for fairer trading conditions for UK animation producers, to help protect or increase the ownership of intellectual property that is of such value to the economy," said Oli Hyatt, founder of Blue Zoo Productions, home to Those Scurvy Rascals. "This country has an illustrious heritage in animation, a wealth of emerging young talent, and is a major worldwide exporter of animation for TV. We aim to work with the government to get the best possible trading conditions for UK producers faced with increasingly subsidized competition from overseas."

The global animation industry is worth about £200bn worldwide, but despite its huge legacy in the genre, and multi-award-winning talent such as Aardman Animations' Nick Park, the UK industry is only worth about £120m. It is also a relatively youthful industry – about half the people working in it are under 35 – and provides valuable skilled employment outside London. About 70% of the industry, which employs almost 5,000 people, is based outside the capital.

Both Canada and France have introduced financial incentives for animators, while Ireland, Wales and Scotland also offer some form of support. England, however, offers nothing at all.